The EUR/USD pair is hovering around 1.0700 as it struggles to hold above the psychological mark while the greenback recovers strength. The pair fell to a daily low of 1.0651 but managed to bounce back to the 1.0710 area at the beginning of the New York session.
The U.S. dollar advanced earlier on the day, underpinned by Treasury yields’ rise. However, as yields turned lower, so did the buck. The yield on the United States 10-Year note hit a peak of 3.062% on Tuesday before falling back to 2.96%.
On Thursday, the European Central Bank will announce its monetary policy decision. Although no rate changes are expected, the bank is poised to end its QE program. The tone officials take in their monetary policy statement and their outlook for the July meeting will be critical for the EUR/USD.
The lack of clear signals toward the first hike in July or a "dovish" tone from President Christine Lagarde could weigh on the euro. However, even if the “hawkish” tone is present, a “buy the rumor, sell the fact” scenario cannot be ruled out.
From a technical standpoint, the EUR/USD holds a slightly bullish tone according to the daily chart. However, the upward momentum continues to fade as the pair cannot establish above a descending trendline coming from February highs.
The RSI is flat just above its midline, while the MACD continues to print green but dwindling bars, indicating the decreasing buying interest.
On the upside, the EUR/USD pair needs to break above the mentioned trendline, currently around 1.0760, to pick up bullish momentum, with the following targets seen at the 1.0850area and then the 100-day SMA at 1.0950.
On the other hand, immediate support is seen at the 20-day SMA around 1.0620, followed by the 1.0600 psychological level and the May 20 low at 1.0532.
